BEIJING: China National Chemical Corp (ChemChina) is to buy Pirelli, the world’s fifth-largest tire maker, in a 7.1 billion euro ($7.7 billion) deal that will place one of the symbols of Italy’s manufacturing industry in Chinese hands.
The deal agreed with Pirelli shareholders on Sunday is the latest in a string of takeovers in Italy by Chinese buyers, who can take advantage of a weak euro just as signs emerge that Europe is coming out of economic stagnation.
It will give State-owned ChemChina access to technology to make premium tires, which can be sold at higher margins, and give the Italian firm a boost in the huge Chinese market.
The bid for Pirelli marks a return of China’s State-owned enterprises (SOEs) to global dealmaking following a hiatus prompted by President Xi Jinping’s anti-graft crackdown that targeted several current and former senior SOE officials.
It would be China’s fifth-biggest outbound deal by an SOE, according to Thomson Reuters data, and the first major acquisition since China’s MMG Ltd led a consortium last year to buy the huge Las Bambas copper mine in Peru from Glencore.
ChemChina’s tire making unit China National Tire & Rubber will first buy the 26.2 percent that Italian holding firm Camfin owns in Pirelli, and will then launch a mandatory takeover bid for the rest.
The bid will be launched by a vehicle controlled by the Chinese State-owned group and part-owned by Camfin investors, who include Pirelli boss Marco Tronchetti Provera, Italian banks UniCredit and Intesa Sanpaolo, and Russia’s Rosneft, Camfin said in a statement.
The offer will be launched at 15 euros per share, valuing the group at 7.1 billion euros excluding net debt of almost 1 billion euros at the end of 2014. The ChemChina unit also envisages taking Pirelli private.
As details of the deal were leaked on Friday, shares in Milan-listed Pirelli, which started business 143 years ago producing rubber items, rose to a 25-year high and closed at 15.23 euros – a sign that traders predict an improved offer or a rival bid.
